Penalty on Charitable Trust for Providing Benefit to Related Persons Nature of Default A penalty is levied if any trust or institution, referred to in Section 11 or 10(23C)(iv)/(v)/(vi)/(via), has applied its income for the benefit of an interested person. Quantum of Penalty • First violation: Penalty equals the amount of income applied for the benefit of the… Read More »

Penalty for False or Omission of Entry in Books of Account Nature of Default Penalty may be imposed if, during proceedings, a person is found to have: made a false entry in the books of account; or omitted a relevant entry in the books to evade tax. It also applies to any other person who… Read More »

Penalty in Case of Undisclosed Income What Constitutes Unexplained Income? Unexplained income includes cash credits, investments, expenditures, money, or amounts borrowed or repaid on hundi, where the assessee fails to explain their nature or source satisfactorily. When is Penalty Levied? • Penalty may be imposed by the Assessing Officer, Joint Commissioner (Appeals), or Commissioner (Appeals)… Read More »

Penalty in Case of Search Nature of Default Penalty may be imposed if a search is initiated under Section 132 between 15-12-2016 and 01-09-2024 and undisclosed income is found. Undisclosed income includes: Money, bullion, jewellery, or other valuable articles not recorded in books before the search date. Entries in books or documents found during the search that… Read More »

Penalty for Failure to Keep Information in respect of an International Transaction Nature of Default Penalty may be imposed for: • Failure to keep and maintain information and documents relating to international or specified domestic transactions under Section 92D. • Failure to report such transactions as required. • Maintaining or furnishing incorrect information or documents with… Read More »

Penalty for Failure to Keep, Maintain, or Retain Books of Account Nature of Default • Failure to keep or maintain books of account and other documents as mandated by Section 44AA. • Failure to retain such books and documents for a period of 6 years. • A separate penalty under Section 271B applies for failure to get accounts… Read More »

Penalty for Under-reporting and Misreporting of Income Amount of Penalty • Under-reporting of income: 50% of tax payable on under-reported income. • Misreporting of income: 200% of tax payable on misreported income. Penalty orders are passed by the Assessing Officer, Joint Commissioner (Appeals), Commissioner (Appeals), Principal Commissioner, or Commissioner. The burden of proof for misreporting… Read More »

Penalty for Assessee-in-Default Nature of Default Penalty is attracted if an assessee fails to pay tax due and is treated as an assessee-in-default. The liability to pay penalty persists even if the tax is paid before the levy of penalty. However, penalty shall not be imposed for default in payment of penalties imposed under Chapter… Read More »

Penalties under the Income-tax Act Penalties Imposable Penalties are imposed on assessees for specific defaults as enumerated under different sections of the Act. Some penalties are mandatory, while others are discretionary. Key penalties include: Section Description Penalty Amount 221 Default in payment of tax within the prescribed time Up to the tax amount in arrears… Read More »

Recovery under Agreements with Foreign Countries [Section 228A] If foreign Government certifies arrears under its law against a resident or person having property in India, CBDT may forward certificate to TRO for recovery in India. TRO recovers as per Indian law and remits net proceeds to CBDT. Recovery of Penalty, Interest and Other Sums [Section… Read More »